Location Based Advertising (LBA) – A Complete Guide

Location-based mobile advertising

Businesses all over the world are dependent on the number of visitors frequenting their physical stores.  Modern marketing techniques are hence focusing on location-based advertising (LBA) to target their potential consumers who can reach the store immediately to check out the advertised product. 

Small to medium businesses (SMBs) understand the value that LBA to increase their daily foot traffic and create more sales conversions. 

A report shared by Factual says that 9 out of 10 marketers believe that location-based advertising creates higher sales, growth in the customer base (by 86%) and an increase in customer engagement (by 84%). 

Almost 9 in 10 marketers said location-based advertising and marketing resulted in higher sales, followed by growth in their customer base (86%) and higher customer engagement (84%).

As an SMB, you already know the struggle when it comes to your ROAS (Return on ad spend). That’s exactly where LBA works its wonders!

As per prediction made by eMarketer, the marketers will be spending $26.5 billion on LBA in the year 2019

So what do SMBs need to get the best out of location based advertising (LBA)?

Following are the three key factors that make all the difference when you want LBA to work for your business:

  • Accuracy of the customer location data
  • Understanding customer behavior
  • Compelling creatives

 

What is location-based advertising (LBA)?

So what really is location-based advertising (LBA) and why is it so effective in tapping the potential customers? 

LBA is the digital world’s latest innovation. It allows you to send across your marketing message to your customers when they are within a certain geographic distance.  

Businesses can actually tailor their messages based on the retail location, routes, weather, and of course, behavioral patterns of their local customers. 

Since LBA works based on the knowledge of the customer’s location and their behavior, they are able to tap into their habits and shopping patterns more effectively. Creating offers and advertisements that make sense to the local customers and relate with them is very valuable in encouraging them to visit. 

In a way, LBA is a personalized and targeted form of digital advertising. 

Imagine receiving a rich media ad on your mobile phone that talks about this great clothing brand sale that’s running in an outlet just a block away from you. Making a visit to the store would be hard to resist, right? Especially, when you’re already so close by!

And then, there’s the get location button cleverly placed on the ad design which allows you to look for directions and reach the sale wonderland immediately!

That is the potential of LBA. 

“The State of Location-Tracking Mobile Apps in 2019” report shows that 96% of the surveyed adults (727) have seen an ad that references their location. 

Using the customer location data and teaming it with the previously acquired knowledge of their behavioral patterns and other details can work amazingly to boost sales. Of course, clever design and marketing strategies like visuals, discounts/offers, CTA tabs play an important part in drawing the customer’s immediate attention. 

Regular mobile ads are way more effective when you focus on the target audience and their hyper-local data. LBA is hence used as a personalized form of advertising that hits the target audience timely. 

Mobile targeting helps the brands and businesses to target relevant audiences through advertisements that are based on the demographics and other essential data points. The ads work by identifying and segregating consumers who are likely to fit into their “ideal customer” profile.

 

Types of LBA techniques

LBA is dependent on various parameters. As a marketer, you may need to collect and leverage different sets of information to efficiently reach out to your target group of customers. 

Following are some common practices used for LBA:

Hyper Contextual Targeting

These location-targeted ads are meant to convey hyper contextual data that’s meaningful to its target group of audience. 

Hyperlocal data is collected and then used to deliver these contextual messages. While the method is often used to drive the purchase intent and increase conversion rates, it can also be used by agencies and organizations to spread relevant awareness messages within a set radius. 

These ads are specifically designed for personalized messages that are relevant only to a limited set of audience. Additionally, to make them more impactful, the ads are shown at relevant times during the day. 

Geo Aware Targeting

Geo Aware targeting or Geo-targeting uses real-time location data (provided by mobile service providers). Mobile ads are then delivered to consumers who are within a certain radius of the store. 

Geo-targeting or real-time advertising has been around for a good number of years now. 

location based mobile advertising

©geoawaresomeness.com

Again, the essential points here are to study and have a compilation of data on the behavioral aspects of potential customers. So when the target audience is in the vicinity of your store, these ads can hit them at the right time and provoke them to visit your store to make a purchase or check out a new product. 

Location or Place-based targeting

Place based mobile ads target a fixed area and send meaningful ads to customers entering that defined boundary within a specific timeframe. 

Imagine entering a movie hall and receiving an ad content that also offers you some amazing coupons that can be availed on your snacks while you’re there. 

Modern ad designers understand the use of devices and technologies like iBeacons which can communicate with iPhones through Bluetooth. This information is used to determine the exact location which further helps in determining a specific timeframe in which the audience receives the ad content. 

Geo-Fencing

Geofencing is in a way similar to place-based advertising since it allows you to target customers within a fixed and predefined area. Areas are defined based on the longitude and latitude information that is derived out of a user’s mobile device. 

Geofencing works like a virtual boundary that is created in a specific area/radius in order to target customers around it and drive them to a particular destination. 

Imagine creating a virtual wall that goes around a radius of 500 meters around your store. Geofencing ads designed with rich creatives along with attractive offers can attract the target audience moving within this circle. The idea is to tap the customers within a virtual marked boundary to drive foot traffic to your store within a shopping area. 

The technique uses global positioning systems (GPS) along with radio frequency identification (RFID) to create a “fence”. 

Geo Conquesting

This is a brilliant targeting marketing strategy used by ad designers. Geo conquesting specifically targets customers who are physically in or around the competitor’s place. 

This relatively new marketing gimmick is used to pull away the competitor’s foot traffic by offering them better and more attractive deals when they are about to make a purchase at a competitor’s store. 

location based mobile advertising

©leadprovide.com

Various sectors like restaurants, clothing brands, financial services, telecommunication services, etc make use of geo conquest advertising techniques. The idea is to leverage the consumer’s behavior and state of mind at an appropriate time through impactful ad content. 

Beacons

Using beacons is another aspect of LBA. The technique works similar to geofencing but makes use of small physical objects that are placed in the desired locations. These devices detect the presence of a user mobile, the moment it moves within the range. 

As soon as the signals are received, servers send mobile advertisements or in-app advertisements.

 

Benefits of LBA

Coming down to the key question- why use LBA? and how is it beneficial to business owners (including small-medium business owners)?

Let us begin by understanding the factors that make location based mobile advertising so effective. It is true that the consumers have better access to data but there are several other contributing reasons that make these ads so successful.

1.Personalization: Personalizing a rich media ad based on the customer’s location increases the likeliness to show them something relevant.

2.Timely: Since location based content is served to users in real-time, the chances of brands to target customers at precise moments increases.

3. Targeted: As per a report by IAB UK study, “around 48% people use ad blockers because they find the ads irrelevant”. Localizing the ads, hence, provides a scenario where they can be targeted to specific people in different geographical locations.

As per the 2018 Location Based Marketing Report by Factual, LBA helped in ad targeting, improved personalization, customer experience, and audience engagement. 

As the figure above indicates, “marketers who use location data to personalise their ads find benefits in terms of increased understanding of the audience (91%), more effective campaigns (84%), more accurate targeting (62%), positive customer experience (87%)” (Source: 2018 Location Based Marketing Report by Factual). 

And the result?

A visible lift in sales and increased conversion rates!

With more and more organizations getting into the already competitive market of small and medium businesses, hyper local mobile advertising is the best chance to attract your target customers and provide them added value. 

And since the cost of mobile advertisements is still relatively low (source: eMarketer), it makes even more sense to include them as a part of your marketing strategy. 

According to the Internet Advertising Bureau (IAB) report for 2016, 66% of the surveyed marketers believe that location based advertising is possibly the most exciting mobile opportunity. 

location based mobile ad spend

©bluedot.io

With technology getting more sophisticated by the day, business owners are now able to tie the mobile devices around their store location to actual customers. Needless to say, “location” is a very important aspect of advertising. 

Customers visit a store, share the geological location of Facebook or WhatsApp and start a cycle that attracts more customers to the place. 

 

Steps for starting a LBA campaign

Ready to give your business a boost through LBA campaigns? Following are the essentials to start running your campaign:

1. Plan the mobile campaign

Planning the mobile ad campaign is the first step in the journey. Mobile platforms present the unique advantage of providing the exact information at a specific time and place that prompts the users to take instant action. 

It is important to consider the following points when planning a mobile ad targeting strategy that is location-based too:

  • Leverage the data technology and data to create a location based strategy for your campaign.
  • Optimize the features of mobile advertising. These include contextual, in time, personalized, etc. 
  • Make the camping customer oriented and ensure that the customers benefit from the said mobile marketing and like the way you present your brand/product.
  • Understand and select mobile technologies for optimal results
  • Work with the ad designers to enrich your banner ad formats and content
  • Ensure that the ad is not disruptive to the customer’s experience.
  • Make sure to add CTA tabs like “click to call”, “ get directions”, “download coupons”, etc. Ensure that your viewers are prompted to take instant actions on viewing the ad. 
  • Set up metrics for evaluating the success (reach, clicks, click ration, cost per click, conversions, conversion to leads, foot traffic, sales, etc). To do this, it will be required to track user actions in terms of coupon claims, phone calls, footfall, etc. 
  • Mark out the places where your target customers will be at a specific time and define the radius around your building. 
  • Understand the target audience’s needs and buying behavior when in a targeted locality and match it up with their demographics. 
  • Procure data on the search history of your target customers. This will help design targeted personalized messages for the audience. 
  • Check out your options during media buying and bid on advertisements offering better locations
  • Use location-centric keywords like “salon near cafe”, etc. 

The aforementioned points teamed up with well-defined marketing objectives is considered an excellent strategy to unlock the potential of mobile advertising and get higher sales figures, store visits, and conversions. 

Needless to mention, great ad content and leveraging of technologies is crucial to get great results. Various platforms like Online-to-Offline (O2O) platform can help you track and manage your marketing channels.

 

2. Media buying for location based targeting

In order to show your ads to the target customers every time they are surfing their net (or even at a specified relevant time), you need to buy ad space. Ad spaces are bought for location based targeting and displaying your ad to the right audience appropriately. The process of buying ad space is known as “media buying”. 

Solutions like using Demand Side Platforms (DSP) are used for media buying and location targeting. DSPs can be in the “do it yourself” models or can be handled by managed services. 

Most service providers will typically ask for a minimum ad spending per campaign. 

Ad agencies work with the DSPs and do the “media buying” along with other tasks like building the ads, optimizing the ad campaigns, etc. 

Various creative technologies are used to make these ad campaigns profitable for business owners. 

When choosing an ad agency, it is, however, important to measure success by the number of leads or sales that the impressions are generating for your business. 

Ad agencies often propose to measure the success of an ad campaign by counting the number of CTRs (click-through rates). However, a target customer just viewing your ad does not really count unless the ad is efficient enough to make the users take appropriate actions. 

Ensure that your advertising budget brings your appropriate results in terms of sales and conversions.

 

3. Producing banner creatives

Banner designs play a significant role in designing a successful mobile advertising campaign. Interactive rich media advertisements are considered highly efficient in capturing the user’s attention and turn it into conversions. 

Various creative ad services are offered by rich media vendors available in the market. Most organizations have ready to push templates that can be modified based on your needs. A rich media ad can be included into a pre-packaged plan in addition to other services like media buying, optimization, etc. 

Advertisements that display actionable tabs like the following are considered very successful:

  • Tap to call buttons that help the users to make bookings/reservations. 
  • Discount coupons that can be redeemed as soon as the target customers walk in the store. 
  • Get direction or similar features that guide the prospective client to move them to your store.

 

4. Ad camping management, tracking and optimizing

Once your banner creatives are in place, it is required to effectively manage your campaign during its running period. LBA campaigns are carried out through a step by step process in order to successfully reach your goals. 

It is hence important to ensure efficient management to get maximum impact. 

Following are some important tips to consider during the campaign management stage:

  • Create a proper tracking mechanism to collect data based on your metrics plan (cost per click, cost per conversion, sales, etc). This is extremely important to gauge whether the location based mobile advertising campaign is meeting the set objectives. In short, ensure that all actions (taken after viewing the ad) can be tracked.
  • Get sufficient data to get insights about the behavioral patterns of your target customers. The data generated through the first stage of your campaign can also be used to optimize your future campaigns. 
  • When considering outsourcing, choose an ad agency that can provide end to end location based mobile advertising services to you. 
  • As mentioned earlier, base your deals on the end results, which are the leads and the sales. Ad views that don’t get conversions mean nothing in the business world. 
  • Estimate the average annual as well as Life time value (LTV) of a customer and plan your ad spend accordingly. 

 

Measuring the quality of location data

For an LBA campaign to succeed, it is vital to rely on the following three measuring parameters:

  1. Accuracy- The distance between the estimated location and the actual location.
  2. Precision- Level of pinpointing for a particular device location. Lat longs that measure upto two decimal points are precise within one km of the user location whereas those measuring upto 4 decimal points can be precisely pinpoint within 10 meters. 
  3. Recency- The time lapse between when the location data was collected and to when it is passed on to the ad servers. 

The aforementioned factors can in turn be impacted by the data source, GPS coordinates, apps, accuracy in interpreting the data, Centroids,  etc. 

 

How can businesses benefit from LBA?

Almost all businesses that operate through a physical store and rely on their sales figures can benefit from LBA. 

But that’s not all! 

Even service-related businesses like finance, electricians, painters, cleaners, beauticians, etc are now beginning to use LBA to improve their business reach.

Service-related professionals work in fixed localities and find hyperlocal mobile advertising extremely beneficial to find new customers or get more work from the existing ones. 

Following are some examples that go to show how businesses can benefit from LBA.

 

Fast food chains

2014 saw Starbucks using LBA mobile ads to target their potential customers. The metric for the measurement of success was the footfall or the number of people that walked into the food outlet after seeing the advertisement. 

location based mobile advertising

©geoawaresomeness.com

Since then, various other global fast-food chains have used LBA to increase their sales.

 

Clothing and accessory brands

Apps like the Regent Street were designed based on the customer’s input data. Users entered their likes and dislikes into the app and the app automatically shows relevant shops according to it if the users are within a set radius of the store. 

 

Cars and automobiles

Car dealerships have benefited from the use of LBA.

Brands like the Rodeo Ford tapped into its customer base by targeting males within the age group of 30 to 45 years with more likelihood/intent to buy. The add included a store locator as a CTA (call to action feature). 

The result? An overall increase in the likeliness of people clicking the ad, visiting the store and inquiring or booking appointments for the car. 

Knorex XPO Platform with Geolocation and Proximity Feature

Knorex XPO comes with proximity capability

Restaurants and food chains

Restaurants and food joints have been the most enthusiastic players in the mobile advertising sector. Geo-targeting customers that are local and are usually available/reside within a defined radius of the outlet has been their winning strategy. 

Special promos/food coupons that are time-based are embedded within the ad design and the ad is pushed out to the chosen group within the vicinity of the outlet (also an example of place based targeting). 

 

Gyms

With health and fitness being the latest fashion trend, it is only natural for this sector to tap into the potential of the latest technology in the world of LBA. 

Gyms use various formats for LBA. These include geo targeting, or targeting a customer as soon as they are within a pre-defined radius of the gym building. 

Others include strategies like geo-conquesting wherein the health centers target the customers entering a competitor building premises. As soon as you enter a gym building to look up their monthly/annual plans, your mobile device is hit with a more attractive offer from your center. Smart, right?

Couple that with some wonderful promo offers and an easy to fill online form and you’ve got a conversion on your hands!

 

Property dealers

Property agents can and do make use of LBA techniques. The use of rich media components like a property picture gallery or a map guide that pulls the customers to make a visit are used. Other CTAs like tap to call, book a meeting, etc are added in the ad design. 

Geo aware targeting helps the house owners to visit/reach your proposed property when they are house hunting. Other marketing strategies like geo-conquesting can also be used effectively. 

 

And the list goes on….

There are simply endless possibilities and there’s no reason why your business can’t benefit from an LBA advertisement!

The prospects are particularly bright for small and medium business owners (SMBs) who’ve just hit the market and are struggling to establish a name. 

Various businesses like bookshops, retail stores, spas and beauty services, hardware services, car servicing, financial services, florists, etc are now making used hyper targeted marketing techniques. 

 

Final words:

The world of advertising has changed. 

From static banner ads to rich media, interactive mobile ads and now to the location-based advertising (LBA), the options are just getting better. With the wonders that LBA ads can do for businesses, more and more enterprises are willing to embrace the technology. 

It has not just helped drive traffic the brick and mortar stores, increased their conversions but also helped in creating more meaningful customer relationships. That said, the ad design and targeting require a good deal of planning and execution expertise. After all, every business owner would want to justify their ad spend and see that it brings satisfactory results. 

Discuss your LBA strategy with a reputed ad agency and see it drive purchase and increase store footfall, followed by a surge in your sales graph!